The Risk And Precaution Of International Settlement For Voith Paper Company

With the coming of knowledge economy, international trade environment and means are changing rapidly. The whole world is becoming an integrated global market. The international market appears to be the buyers' market. Many exporters take advantage of flexible payment terms besides traditional competitive means of quality and price. Thus, how to select safe international trade settling terms becomes one of the important problems enterprises need to care about. In the past, we learnt in the school that letter of credit(L/C) was the safest payment terms . In fact, it's not totally true. Western countries now almost give up using L/C in order to strengthen their competitive ability. The portion of their open account (O/A) business is as high as 90%, but sleeping account rate is controlled to 0.5%.Risk is objective ,but risk is avoidable. The aim of this dissertation is to give multinational companies such as Voith Paper some good suggestive measures dealing with international settlement. The selection of payment terms will directly affect safety of getting payment. Therefore, this dissertation mainly discussed how to avoid new behind payment and how to be on guard of trade risks .This dissertation mainly studies risks and precautions of international settlements The emphasis of this article is payment terms risk and its management measure .It compares several kinds of payment terms, i.e. remittance, collection and letter of credit, through the problems analysis which are Voith Paper Company faced to find the best payment pattern.Therefore, in its last part some risk precaution measure under non-L/C terms and measures ,such as export credit insurance and internal trading credit insurance,popular in western countries are introduced.